Analysis: What to expect from IBM's new CEO

Virginia "Ginni" Rometty is set to succeed Sam Palmisano as CEO of IBM in January, and industry watchers expect a smooth, drama-free transition as the 30-year IBM veteran takes the reins. Rometty, 54, has played a critical role in shaping IBM strategy, and she's expected to stay the course she helped define.

Last year, Palmisano laid out a strategy for IBM through 2015 that emphasizes key areas of focus including cloud computing, growth in emerging markets, analytics, and the Smarter Planet initiative.

"If you're going to lay out a plan like that, you would certainly want an executive who has been a part of that, and bought into that strategy, to continue that growth path," says Chris Ambrose, research vice president at Gartner.

Rometty, who is currently IBM's senior vice president and group executive for sales, marketing and strategy, joined IBM in 1981 as a systems engineer and moved into a series of managerial roles, including running IBM's global business services division and helping to integrate the $3.5 billion acquisition of PricewaterhouseCoopers Consulting.

Her appointment is unsurprising to industry watchers. Three previous IBM CEOs left the top post at age 60, and Palmisano, who will remain chairman of IBM's board, turned 60 this year. While Palmisano gave no outward signs that he was preparing to give up the position, rumors have been circulating for some time.

The two people mentioned most often as possible successors were Rometty and Steve Mills, IBM's senior vice president and group executive for software and systems.

Most recently, Rometty's name surfaced with greater frequency, Ambrose says. "If [Palmisano] had stayed, I wouldn't be surprised. But the announcement of Ginny doesn't really surprise me either," he said. "She ran a business segment, led the Growth Markets strategy, and now has been leading global sales and marketing. It almost seems like a path of succession into the CEO position."

It became clear that Rometty was the leading candidate to replace Palmisano when she took on responsibility for IBM’s worldwide sales, marketing and strategy efforts, along with managing global strategy, marketing and communications, said Charles King, president and principal analyst at Pund-IT, in his analysis of the news.

“Rometty effectively managed many if not most of the company’s day-to-day processes worldwide. That IBM’s board would trust her with such levels of responsibility meant that her eventual appointment was more or less in the bag,” King wrote.

Choosing someone internal, who will continue along the path set by her predecessor, is classic IBM, which has a history of putting the company ahead of any single personality, Ambrose says.

“It’s a testament to the way IBM tends to operate,” he says. “The IBM brand, the IBM legacy and IBM history is what they want out in front, and not necessarily the CEO, which is different from some of its competitors out there.”

Those who know her say Rometty is energetic and charismatic.

“She’s definitely high energy,” Ambrose says. “My understanding is that she does very well with the customer base. She seems eternally positive and optimistic, both when she’s on stage and in person.”

“I think it's wonderful news for the IBM shareholders,” said Bob Djurdjevic of Annex Research in a statement. “She will bring to the table something that Sam lacks - charisma! She is as smart as anyone, but also has that extra spark which is rare among the business leaders.”

For enterprise customers, the impact of the executive turnover will be negligible.

IBM of late has been focusing on business outcomes for clients, as opposed to selling a particular product or technology, and will likely continue with that messaging, Ambrose says. “Given that IBM has this roadmap and strategy laid out, I don’t expect huge amount of change there.”

Research firm TBR says the appointment is a reaffirmation of core IBM strategies, “namely expansion in growing geographies, spearheading a solutions approach with Smarter Planet and other initiatives that marry analytics and services, and continued targeting of strategic acquisitions, primarily in the software space.”

Rometty’s understanding of IBM’s massive global business, its corporate culture, and the strategy that underlies its core offerings will be hugely helpful in her work as president and CEO, said Pund-IT’s King. He also praised IBM for the smoothness of its succession plans and proven ability to develop a deep executive bench.

“IBM’s election of Rometty as its chief executive revealed a notably structured and rigorous process, and also highlighted the fact that the company follows a far more sustainable path in training its executives for higher position than its major competitors,” King said. “Rometty is a prime example, working in numerous roles and business units across IBM during the course of three decades, developing deep insight and experience in virtually every facet of the company.”

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